“Digital solutions simply had to be up and running swiftly in order to enable clients to continue to do business at a crucial point, and those solutions are unquestionably here to stay,” says Natasha Condon, J.P. Morgan’s global head of core trade. In “A Look Forward: What Executives Wish for America and the World in 2021,” Condon discusses how the pandemic has challenged global trade and payments, and how platforms must start to effectively interoperate to keep trade flowing.
It’s clear that the global pandemic has been a huge challenge for global trade and its associated payment flows, causing a significant drop in trade activity all over the world. While it has caused an acceleration in some of the macro trends in the trade space such as digitization, some of the effects of COVID-19 might be transient in comparison with other factors that have been at play in 2020 — including an evolving world order and the reconfiguration of supply chains in response to geopolitical change.
That said, there are several key developments we have witnessed this year that we believe are now part of how the global trade industry functions and that we hope will continue as the economic turmoil subsides. Rapid digitization was an obvious and immediate impact of the pandemic: Paper documents couldn’t move, trade transactions were halted and ships were stuck at ports. Digital solutions simply had to be up and running swiftly in order to enable clients to continue to do business at a crucial point, and those solutions are unquestionably here to stay. The industry doesn’t want to be in a position where challenges caused by stuck transactions aren’t able to be remedied just because there isn’t a digital channel available.
These changes represent a significant improvement compared to where we were a year ago — but in order to achieve true digitization in the trade space, the many platforms that have arisen globally must start to effectively interoperate. During the initial stages of the pandemic, there was also a huge focus on managing liquidity in a challenging environment and ensuring that it could reach the various parts of the supply chain, particularly those smaller counterparties. What played out, and what perhaps challenged expectations, was a determination among corporates to drive sustainability by using this liquidity to ensure that a diverse range of counterparties could maintain their operations. That is something else that we expect to continue into 2021 and beyond. It means keeping trade flowing, but also reconfiguring how the global trade industry functions.
More generally, we’ve seen a new focus on ESG considerations in the trade space this year, and we expect that those platforms that offer the capability to provide data and tools to support corporate ESG goals will have a significant competitive advantage in the future. For example, our supply chain finance partner Taulia is currently working with a sustainability audit company so that anyone using the Taulia platform for e-invoicing, supply chain financing or dynamic discounting will also be able to monitor the sustainability performance of their suppliers in real time, without the need to build their own connection to an ESG platform. This kind of value-added connectivity will be increasingly important to competitiveness. It’s here to stay.
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